- Finance will be at the “frontline” of change driven by artificial intelligence, according to a new report from Citi.
- According to the report, banking is at greatest risk of job loss due to AI.
- However, the adoption of AI in finance will be slow due to regulatory challenges and other factors.
AI has already been considered to have the potential to dramatically change work in all industries.according to, New reports According to Citigroup researchers, “finance will be at the forefront of change.”
“Banks and financial institutions in the mid-2020s, whether retail or wholesale, will look very different than they did in the mid-1980s or the mid-1940s,” the report said. “AI will repeat this cycle and likely accelerate it.”
General-purpose technologies (GPTs) can create new opportunities for innovation and improve quality of life, but they also “disrupt existing practices,” the report adds, “and therefore create losers, especially in the short term.”
Drawing on data from Accenture Research and the World Economic Forum, Citi researchers said that about 67% of banking tasks are “likely” to be automated or augmented by AI, meaning “banking” (which the report did not define precisely) is likely to face job losses due to AI.
However, Citi said the headcount reductions could be partially or fully offset by an increase in AI-related compliance managers and ethics and governance staff.
But one positive point Citi noted is that it estimates that the global banking industry's profit pool in 2023 “could increase by 9%, or $170 billion, due to AI adoption, from just over $1.7 trillion to nearly $2 trillion.”
AI adoption in finance is slow
In their report, Citi researchers said they believe “the pace of adoption of modern AI tools in financial services, and GenAI in particular, will be relatively slow compared to other sectors,” in part because “the sector is highly regulated and there is a lack of 'off-the-shelf, globally harmonized rules.'”
“While the regulatory environment is evolving in some jurisdictions, implementation will be a challenge for financial services firms as countries move at different speeds, take different approaches and, in some cases, change their positions on whether to regulate,” the report said.
In an interview published in the report, Shameek Kundu, head of financial services and chief strategy officer at TruEra, echoed the same sentiment.
“Traditional adoption of AI in financial services has been widespread, shallow and inconsequential,” Kundu said.
Kundu explains that while “there are many enterprises experimenting with AI for a variety of use cases,” “the scale of adoption of AI across use cases is limited” and “there is a perception that failures in AI systems will have a limited impact on critical business operations.”
He cited a 2022 Bank of England survey that found that “72% of businesses reported using or developing machine learning applications,” but that “the median number of machine learning applications among mainstream UK financial institutions was just 20-30,” and that “fewer than 20% of the already small number of AI use cases are business critical.”
